31 Oct 2010

Where markets fail

Posted by jofr

Car companies and aircraft manufacturers produce cars and planes which pollute the environment with lots of toxic and carcinogenic substances like benzene, a natural constituent of crude oil. People get sick and the climate begins to change. Instead of producing cars and planes with zero emissions, the pharmaceutical industry produces drugs which treat the symptoms, for instance very expensive cancer drugs. And instead of tackling the root of climate change, scientists seriously try to develop technologies which block sunlight by polluting the atmosphere with dust. No kidding! This is just wrong. In the former case, you counter the effects of toxic substances by producing even more toxins (many cancer drugs are cytotoxins), and in the latter case you counter the effects of pollution by producing even more pollution.

The food industry produces stuff which tastes good and sells well, but which is not very healthy. Agriculture uses pesticides to increase production, and the food processing industry cares more about the sales volume than about the health of the customers. It is well-known that people get sick from fast food. A recent study found out again that sugary drinks increase the risk of diabetes dramatically. Advertising suggests that you will be surrounded by good looking healthy people if you drink Coca Cola, but it is more likely that these people have bad teeth, too much weight and type 2 diabetes.. If you consume Starbucks Coffee or Coca Cola regurlarly, you may be well on your way to diabetes, obesity, or both. If people realize it and consume less, companies will spend more for marketing to increase consumation again. And instead of producing healthy food, the industry finds out ways out to make money out of the sick people. The pharmaceutical industry produces drugs and devices that are used to treat the symptoms, for instance type 2 diabetes.

When it comes to social issues and the protection of the weak or to environmental issues and the protection of the environment, markets fail, and the intervention of governments is needed. Companies will exploit natural resources totally until they are completed depleted if they can make money out of it. And they don’t care about people if they can not make money out of them. Germany has a social market economy which tries to protect the citizens from market failure, but even here the power of large international corporations is too large to do anything about the points mentioned above.

(The traffic jam photo of the 405 in LA is from Flickr User Atwater Village)

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